Does Oregon's trade secrets act displace a contractual confidentiality obligation?
The Act does not affect contractual remedies. Except as subsection (2) provides, ORS 646.461 to 646.475 supersede conflicting tort, restitution or other Oregon law providing civil remedies for misappropriation of a trade secret; they do not affect contractual remedies, whether or not based upon misappropriation of a trade secret, other civil remedies not based upon misappropriation of a trade secret, or criminal remedies (ORS 646.473(1)-(2)). A trade secret is information, including a drawing, cost data, customer list, formula, pattern, compilation, program, device, method, technique or process, that derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use, and is the subject of efforts that are reasonable under the circumstances to maintain its secrecy (646.461(4)). Misappropriation, the word the superseding provision turns on, means acquiring a trade secret by improper means knowingly, or disclosing or using one without consent after acquiring it by improper means or knowing it was acquired by accident or mistake (646.461(2)); improper means includes theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy and electronic or other espionage, but reverse engineering and independent development alone are not improper means (646.461(1)). The Act's own remedies are an injunction against actual or threatened misappropriation, which must be vacated on application once the trade secret has ceased to exist though it may continue for a reasonable further period to eliminate commercial advantage (646.463(1)), and attorney fees where a misappropriation claim is made in bad faith, a motion to terminate an injunction is made or resisted in bad faith, or willful or malicious misappropriation is found (646.467).
The trap
Information that is not the subject of efforts reasonable under the circumstances to maintain its secrecy is not a trade secret under 646.461(4), so an NDA covering it gets nothing from the Act. That is why the contract matters: an injunction under the Act must be vacated once the information has ceased to be a trade secret (646.463(1)), while a confidentiality covenant stands on its own terms, and the Act leaves contractual remedies unaffected (646.473(2)(a)). Reverse engineering and independent development alone are not improper means, so an NDA that aims at either is doing work the Act does not do (646.461(1)). Nothing quoted here establishes whether a particular confidentiality agreement is enforceable, or for how long, and a bad-faith misappropriation claim can cost the claimant fees (646.467).
6 authorities
- statuteORS 646.473enactment date not established
The words that state the rule
Except as provided in subsection (2) of this section, ORS 646.461 to 646.475 supersede conflicting tort, restitution or other law of Oregon providing civil remedies for misappropriation of a trade secret. (2) ORS 646.461 to 646.475 shall not affect: (a) Contractual remedies, whether or not based upon misappropriation of a trade secret; (b) Other civil remedies that are not based upon misappropriation of a trade secret; (c) Criminal remedies, whether or not based upon misappropriation of a trade secret; or (d) Any defense, immunity or limitation of liability afforded public bodies, their officers, employees or agents under ORS 30.260 to 30.300.
- statuteORS 646.461enactment date not established
The words that state the rule
“Improper means” includes theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy or espionage through electronic or other means. Reverse engineering and independent development alone shall not be considered improper means.
- statuteORS 646.461enactment date not established
The words that state the rule
“Misappropriation” means: (a) Acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; (b) Disclosure or use of a trade secret of another without express or implied consent by a person who used improper means to acquire knowledge of the trade secret; (c) Disclosure or use of a trade secret of another without express or implied consent by a person who, before a material change of position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake; or
- statuteORS 646.461enactment date not established
The words that state the rule
“Trade secret” means information, including a drawing, cost data, customer list, formula, pattern, compilation, program, device, method, technique or process that: (a) Derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use; and (b) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
- statuteORS 646.463enactment date not established
The words that state the rule
Actual or threatened misappropriation may be temporarily, preliminarily or permanently enjoined. Upon application to the court, an injunction shall be vacated when the trade secret has ceased to exist, but the injunction may be continued for an additional reasonable period of time in order to eliminate commercial advantage that otherwise would be derived from the misappropriation.
- statuteORS 646.467enactment date not established
The words that state the rule
The court may award reasonable attorney fees to the prevailing party if: (1) A claim of misappropriation is made in bad faith; (2) A motion to terminate an injunction is made or resisted in bad faith; or (3) Willful or malicious misappropriation is found by the court or jury.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.